Base criteria of: a $400,000 loan amount, variable, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. If products listed have an LVR <80%, they will be clearly identified in the product name along with the specific LVR. The product and rate must be clearly published on the Product Provider’s web site. Introductory rate products were not considered for selection. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term. Rates correct as at 01 June 2020. View disclaimer.

The RBA usually only meets on the first Tuesday of every month (except January), with its next regular meeting scheduled for Tuesday April 7.

But earlier in the week, RBA Governor Philip Lowe said there would be an additional meeting to "announce further policy measures to support the Australian economy".

This isn't the first time the RBA has made a rate cut outside of its regular meeting - it did one in July 1997, for example - but it is the first time two changes have been made in one month.

Not even at the height of the global financial crisis (GFC) did the Reserve Bank resort to such measures.

However, the crippling effects of the coronavirus on both the domestic and global economy forced the RBA's hand to take this unprecedented measure in a bid to stabilise Australia's economy and soften some of the blows to come.

Governor Lowe's address was very different to one he usually delivers each month.

He admitted that the primary response to the virus is to manage the health of the population, but stated that monetary and fiscal policy play an important role in reducing the economic and financial disruption it causes.

"At some point, the virus will be contained and the Australian economy will recover," he said.

"In the interim, a priority for the Reserve Bank is to support jobs, incomes and businesses, so that when the health crisis recedes, the country is well placed to recover strongly."

Mr Lowe also said the board would not increase its cash rate target until full employment is reached and inflation is "sustainably" within the 2-3% range.

He also stated that quantitative easing will start tomorrow, and that banks will be able to obtain additional funding if they increase lending to business, especially to small and medium-sized businesses.

This lending facility is for up to $90 billion, and more details will be provided in a second statement coming later today.

"Today's policy package from the Reserve Bank complements the welcome fiscal response from governments in Australia," he said.

"Together, these measures will support jobs, incomes and businesses through this difficult period and they will also assist the Australian economy in the recovery."

There's already been a flurry of activity in just the few minutes since this announcement.

Commonwealth Bank CEO Matt Comyn said these are unprecedented times, and call for unprecedented measures.

Commbank has already:

Reduced fixed rate home loans for one, two and three years by up to 70 basis points to a new low of 2.29% p.a.

Launched a new term deposit rate of 1.70% p.a. for terms over 12 months (an increase of 60 basis points)

Reduced small business loan rates by up to 100 basis points

We are making changes to home loan repayments which will provide, on average, $400 cash a month to customers, or $3.6 billion to households across Australia.

Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

The larger non-bank lenders are those who (in 2019) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.

Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.

In the interests of full disclosure, Savings.com.au and loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.

William Jolly
William Jolly joined Savings.com.au as a Financial Journalist in 2018, after spending two years at financial research firm Canstar. In William's articles, you're likely to find complex financial topics and products broken down into everyday language. He is deeply passionate about improving the financial literacy of Australians and providing them with resources on how to save money in their everyday lives.

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